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Article
Publication date: 2 November 2015

Erwin Wauters, Yann de Mey, Frankwin van Winsen, Steven Van Passel, Mark Vancauteren and Ludwig Lauwers

Building on the risk balancing theory and on recent discussions the appropriateness of using farm income maximization as behavioural assumption, this paper extends the risk…

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Abstract

Purpose

Building on the risk balancing theory and on recent discussions the appropriateness of using farm income maximization as behavioural assumption, this paper extends the risk balancing framework by accounting for business-household interactions. The purpose of this paper is to theoretically introduce the concept of farm household risk balancing, a theoretical framework in which the farm household sets a constraint on the total household-level risk and balances farm-level and off-farm-level risk.

Design/methodology/approach

The paper argues that the risk behaviour of farmers is better understood by considering risk at the household level. Using an analytical framework, equations are derived linking the farm activities, off-farm activities, consumption and business and private liquidity.

Findings

The framework shows that a farm household that wants to minimize the risk that total household cash flow falls below consumption needs, may exhibit a wide variety of behavioural responses to changes in the policy and economic environment.

Social implications

The framework suggests multiple ways for policy makers and individual farmers to support risk management.

Originality/value

Risk management is at the core of the agricultural policy and it is of paramount importance to be able to understand behavioural responses to market and policy instruments. This paper contributes to that by suggesting that the focus of current risk analysis and management studies may be too narrowly focused at the farm level.

Details

Agricultural Finance Review, vol. 75 no. 4
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 29 April 2014

Yann de Mey, Frankwin van Winsen, Erwin Wauters, Mark Vancauteren, Ludwig Lauwers and Steven Van Passel

The purpose of this paper is to present empirical evidence of risk balancing behavior by European farmers. More specifically, the authors investigate strategic adjustments in the…

645

Abstract

Purpose

The purpose of this paper is to present empirical evidence of risk balancing behavior by European farmers. More specifically, the authors investigate strategic adjustments in the level of financial risk (FR) in response to changes in the level of business risk (BR).

Design/methodology/approach

The authors conducted a correlation relationship analysis and run several linear fixed effects regression models using the European Union (EU)-15 FADN panel data set for the period 1995-2008.

Findings

Overall, the paper finds EU evidence of risk balancing. The correlation relationship analysis suggests that just over half of the farm observations are risk balancers whereas the other (smaller) half are not. The coefficient in our fixed effects regression suggests that a 1 percent increase in BR reduces FR by 0.043 percent and has a standard error so low that the existence of non-risk balancers is doubtful. The results reject evidence of strong-form risk balancing – inverse trade-offs between FR and BR keeping total risk (TR) constant – but cannot reject weak-form risk balancing – inverse trade-offs between FR and BR with some observed changes in TR. Furthermore, the extent of risk balancing behavior is found to differ between different European countries and across farm typologies.

Practical implications

This study provides European policy makers a first insight into risk balancing behavior of EU farmers. When risk balancing occurs, BR-reducing agricultural policies induce strategic upwards leverage adjustments that unintentionally reestablish or even increase total farm-level risk.

Originality/value

Making use of the large and unique FADN database, to the best of the authors knowledge, this study is the first that provides European (EU-15) evidence on risk balancing behavior, is conducted at an unprecedented large scale, and presents the first risk balancing evidence across countries and farming systems.

Details

Agricultural Finance Review, vol. 74 no. 1
Type: Research Article
ISSN: 0002-1466

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Book part
Publication date: 11 September 2020

Nataliia Karachyna, Tetiana Vakar, Yevheniia Moroz, Volodymyr Semtsov and Anna Vitiuk

The conceptual foundations, principles, and mechanisms of territorial branding concerning the prospects of rural development in the Third World countries are the subject of the…

Abstract

The conceptual foundations, principles, and mechanisms of territorial branding concerning the prospects of rural development in the Third World countries are the subject of the study. The systematization and study of the problems and experiences of territorial branding as a technology of development and overcoming of poverty in the agrarian society of Ukraine is the purpose of the paper. The socioeconomic condition of the modern agrarian society of Ukraine is analyzed with explaining the nature and extent of poverty in rural areas. The basis of the research was the thesis on the expediency of social stratification, including explanation of the causes of poverty by the criterion of economic behavior of individual groups of agents. The data obtained are available in adjusting further agrarian reforms, especially regarding its social orientation, where it should be involved: sociological stratification of groups of agents of each community to identify and stimulate an economically active society, analysis of the causes of the spread and nature of poverty in this rural area, determination of domestic sources of economic growth for local economy, and the implementation of these factors in the process of modernizing of economic relations.

The main method of research was the study of the unique experience of individual rural communities. The methodology of the study foresaw the study of the prospects of rural development of the post-industrial type through the determining role of the factor of territorial branding. Monitoring the potential of territorial branding for rural areas of Ukraine using SWOT analysis has shown the uniqueness of risks, limitations, and prospects. It has been established that the conditions of neutralization of weaknesses and risks are in the combination of economic (primarily investment) and cultural and political initiatives, where a significant role belongs to the effects of community self-organization. At the same time, the prospects are due to the presence of unique institutional assets, natural, climatic and economic conditions, and possible perception of the idea of the rural population as such, which does not contradict the basic cultural values. The emphasis is placed on the fact that the realization of rural development in Ukraine as a national policy should take into account that Ukrainian rural communities remain “difficult,” mostly depressed economies, where the level of economic activity is traditionally low and unemployment is high. At the same time, studying the experience of the effectiveness of territorial branding allowed to generalize and classify the factors of brand-forming content for the rural areas of Ukraine, which became (1) a unique institutional history; (2) landscape and recreational potential; (3) special economic behavior of local inhabitants; (4) investment attractiveness of the territory; (5) unique economic specialization of the territory; (6) tourism activity; and (7) the role of local government. Significant socioeconomic effect of these examples is fixed. The area of application of these results is, first of all, the activity of local authorities of rural communities, nongovernmental organizations, and universities, as well as regulatory policy in terms of decentralization.

Details

Applications of Management Science
Type: Book
ISBN: 978-1-83867-001-6

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Article
Publication date: 28 May 2021

Abdulkadir Madawaki, Aidi Ahmi and Halimah @ Nasibah Ahmad

The purpose of this paper is to demonstrate the relationship between internal audit functions (IAF) and financial reporting quality (FRQ) and whether such a relationship is…

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Abstract

Purpose

The purpose of this paper is to demonstrate the relationship between internal audit functions (IAF) and financial reporting quality (FRQ) and whether such a relationship is moderated by senior management support (SMS) in listed companies in Nigerian Stock Exchange (NSE).

Design/methodology/approach

This research is a cross-sectional study, using primary data in the form of a survey sent to 175 listed companies in NSE. A total of 149 questionnaires have been collected and analysed out of which 97 were found to be useful and used in the final analysis.

Findings

The findings indicate a positive and significant relationship between internal audit qualities of work performed, internal control activities, coordination between internal and external auditors and FRQ and this finding was also supported by SMS as a moderator. However, the results show a negative and insignificant relationship between internal audit competency, organisational status and FRQ.

Research limitations/implications

The findings support the assumption with regard to agency theory. The board should support the IAF to serve as an effective monitoring mechanism in minimising opportunistic management actions. Regulators should also ensure adequate structures that will strengthen the organisational status of the internal auditors to perform towards improving FRQ.

Originality/value

The study contributes to the existing literature by assessing the effect of IAF on FRQ as moderated by SMS.

Details

Meditari Accountancy Research, vol. 30 no. 2
Type: Research Article
ISSN: 2049-372X

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